Setting the record straight on health law’s delayed small business features

John Arensmeyer

John Arensmeyer

This memo was originally issued on April 4, 2013:

The Department of Health and Human Services’ proposal to delay critical requirements for small business health insurance exchanges in some states is a disappointment to Small Business Majority and millions of small businesses. It’s a letdown to small business owners and their employees looking forward to robust, competitive exchanges in 2014. We hope this proposal is recognized as counterproductive and is abandoned.

That said, there’s a tremendous amount of misinformation circulating about what the rule would actually mean. We want to set the record straight.

What the Rule Would Do

The proposed rule would delay two features of small business exchanges in some states until 2015. It would not delay opening of the exchanges themselves. Exchanges will still open Jan. 1, 2014.

The rule would mean that in some states, two features of the exchange won’t be implemented: 1) employee choice and 2) premium aggregation. These are wonky healthcare terms, but the impact their delay would have is fairly straightforward. Stalling employee choice means small employers will have to wait until 2015 to be able to offer workers an array of health plans to choose from. Delaying premium aggregation means an administrative function that would simplify the payment process for employers also won’t be available for a year. The two features are linked—premium aggregation is not needed without employee choice.

The Facts

Exchanges still open; small businesses still have more than one plan option

What the rule would not do—despite a multitude of reports saying otherwise—is strip small businesses of any coverage choice whatsoever, essentially forcing all small business employers and their workers into one health plan.

Indeed, word on the street is that all small businesses that enroll in exchanges will have access to only one plan. Some reports have even gone as far as saying this plan will be government-run. Neither one of these is true.

Multiple private plans still available

Whether the rule is finalized or not, come 2014, two things will be true: there will be a full array of private health plans offered through the small business exchanges, and employers will be able to choose a plan from them. Their employees can then decide whether to enroll in it. This is essentially how the small group market works right now. What the rule means is that employees themselves will not have a menu of plans to choose from until 2015—which is a new benefit the law provides for small businesses.

Only applies to certain states

It’s also important to note the rule requires only states that have federally facilitated exchanges to delay these features a year. Federally facilitated exchanges are those created by the federal government in states that haven’t chosen to create them on their own. The 17 states implementing their own exchanges can still extend employee choice and premium aggregation to their customers starting in 2014. Nearly 40% of small businesses in this country do business in the 17 states implementing their own exchanges. That means there will be employee choice among health plans for those businesses next year—if their states choose to give it to them.

No impact on self-employed

What’s more, delaying this rule does not impact America’s 22 million self-employed individuals, nearly 30% of whom are uninsured. As planned, these entrepreneurs will still be able to purchase insurance through the individual exchanges in 2014—a huge boon to owners who have struggled to purchase affordable insurance for decades.

The Bottom Line

While certainly disappointing, delaying employee choice and premium aggregation is not the end of the world. Starting next year, small employers will still be able to pool their buying power in the exchanges, giving them the kind of clout large businesses currently enjoy. They’ll still get administrative help and, in many places, will have more choices of plans than they currently do. All the original features of exchanges will go into effect in 2015.

Small Business Majority has been talking to real small businesses across the country since the law was passed three years ago. We know they like the features of the exchange that could be delayed, along with other key provisions including: 1) being able to pool their buying power; 2) the Medical Loss Ratio provision requiring insurers to spend 80% of premium dollars on care; 3) the preexisting condition ban; and 4) the small business healthcare tax credit, which in 2014 will only be available to small business owners who purchase coverage through an exchange. Our national opinion polling further underscores their support for these features.

We hope the proposed rule isn’t finalized, because small businesses nationwide are looking forward to employee choice and premium aggregation. Nevertheless, these features will still be in the exchanges in 2015—albeit a year late.

New TV Ad, Opinion Poll Highlight Colorado Small Businesses’ Support for Balanced Energy Policy That Ensures Protection of Public Lands

Colorado small business owners strongly believe the preservation of the state’s natural assets is essential to their financial success and that of local economies, and they support the president’s ‘all-of-the-above’ strategy to develop new energy resources, particularly if it includes provisions to protect public lands, according to opinion polling we released this week and reflected in an ad airing in the Denver metro area.

Check out the ad here:

The poll, conducted by Greenberg Quinlan Rosner Research, found nearly two-thirds (63%) of Colorado small business owners agree, with 43% strongly agreeing, that access to parks, public lands and other outdoor opportunities is a large part of the reason they live and do business in Colorado. Exactly half agree Colorado’s national parks, forests, monuments and wildlife habitats are not only an essential part of the outdoor culture and quality of life, but also one of the reasons they do business there.

In addition, 72% support the president and Congress’s “all-of-the-above” energy strategy, which promotes development of various energy sources including solar, wind, natural gas, oil, coal and more. But they find this policy even more attractive if it takes steps to ensure some areas remain accessible to visitors and free of development: 55% would be more likely to support an all-of-the-above strategy that takes that extra step. This is more than double the percentage of owners who would be less likely (26%). Today, Small Business Majority released a TV commercial in the Denver area demonstrating support from real small business owners who are looking for an all-of-the-above energy approach that protects public lands.

“Very recently, I moved my company to Colorado because I knew it was the ideal place to find the right customer demographic—and the most well-suited employees—to make my business thrive,” said John Land Le Coq, owner of Fishpond Inc. and Lilypond Inc. in Denver. “As a company that offers outdoor products, it’s important to us that we use our business to spread the word on issues that revolve around the outdoors. We didn’t start the company this way, but it became who we are because of the big impact that protecting the outdoors has on the success of our business. ”

A recent proposal in Congress that garnered small business support in the poll would establish Browns Canyon and the Arkansas River Valley as a national monument. Two-thirds support this proposal, which would allow continued vehicle access and public use of Browns Canyon such as hunting, fishing and rafting, but prohibit new oil and gas drilling, and other development.

In addition, small business owners agree by a 4:1 ratio that protecting public lands by designating new national monuments and national parks would positively (rather than negatively) impact local jobs and the economy. Another 53% feel such efforts would positively impact small business opportunities tied to public lands, and 51% say it would help Colorado attract and retain entrepreneurs and new businesses.

Our nation’s most prolific job creators are asking that smart steps are taken to preserve Colorado’s natural assets because they believe it’s good for business. It’s evident public lands play an important role in entrepreneurs’ decisions to open businesses in Colorado. And they’ve seen firsthand that protecting those areas can attract business, which is why they’d like to see national monuments established to preserve them, and it’s why they are asking lawmakers to balance public lands protection as they develop new energy policies.

This was not just a poll of owners whose income is related to outdoor activities. In fact, 87% report their revenue is not tied to open space in any way, such as selling outdoor equipment, offering bike tours or even just owning a business near a touristy outdoor area. When asked how their businesses are faring, 41% of Colorado small business owners say they’re doing well, while only 12% say they’re not doing well.

Additional findings from the poll include:

  • 83% agree we can protect land and water, create jobs and maintain a vibrant economy simultaneously.
  • 93% believe national parks, forests, monuments and wildlife areas are important to Colorado’s economy.
  • 92% believe public spaces drawing tourists can boost business for local restaurants, hotels, grocery stores and more.
  • 66% believe we should not allow more private companies to develop public lands when doing so would limit the public’s enjoyment of them.
  • 53% identified as Republican or independent-leaning Republican, 28 percent identified as Democrat or independent-leaning Democrat and 18 percent identified as Independent.

For more information on the poll, visit http://www.smallbusinessmajority.org/small-business-research/public-lands

Tax Credit Report: 7 in 10 Small Businesses Eligible for Combined $15.4 Billion in Healthcare Tax Credits

Huffington Post

Since the enactment of federal health care reform, hundreds of thousands of small business owners across the country have been able to claim a tax credit for offering their employees health benefits — and millions more are eligible, according to a report released today by advocacy group Small Business Majority and consumer group Families USA. For tax year 2011, seven in 10 small businesses with 25 or fewer employees are eligible for the credit.

But most striking is that the majority of entrepreneurs don’t even know this credit exists.

American small businesses employ millions of workers and create 65 percent of all net new jobs. They can be found in every pocket of the country, driving growth in metropolitan cities, suburban settings and rural towns. Small businesses hold an iconic position in the American consciousness — a position that sometimes makes it easy to forget how much they struggle to achieve that deserved recognition.

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New Report: Tax Credits Could Help up to 3.2 Million Small Businesses Provide Health Coverage for Their 19 Million Workers

John Arensmeyer

John Arensmeyer

Original statement issued May 9, 2012:

More than 19 million U.S. workers are employed by the 3.2 million small businesses eligible for $15 billion in tax credits in the federal healthcare reform, according to a new report released today. The tax credit helps small businesses pay for health coverage for their employees. A major obstacle to coverage, the report notes, is that many small business owners are unaware of these tax credits because of the noisy—and often misleading—debate over healthcare reform.

The tax credit program is outlined in a report released today by Small Business Majority and the consumer group Families USA. The report contains detailed information on the number of eligible employers and employees in each state whom the program could benefit. It also includes the total dollar amount of tax credits that could be provided to businesses in each state.

In general, businesses that offer health coverage and employ fewer than 25 full-time middle-class workers are now eligible to receive a tax credit of up to 35 percent of the cost of premiums for their workers. In 2014, the size of the credit will increase to cover up to half of the cost of health insurance provided to workers.

The tax credit was included in the Affordable Care Act to help the smallest businesses offer coverage—those who traditionally have the most difficult time doing so. In 2011, only 71 percent of small businesses with 10 to 24 workers offered coverage to their workers; among small businesses with fewer than 10 workers, only 48 percent offered coverage. By contrast, 99 percent of businesses with 200 or more workers offered coverage.

The following are among the key findings of the report, titled “Good Business Sense,” about small business employers. (The report itself also contains state-specific data.)

  • More than 3.2 million small businesses (70.1 percent of businesses with fewer than 25 workers) are eligible for tax credits to help with the cost of health insurance coverage for their workers for the 2011 tax year.
  • More than 1.3 million small businesses are eligible to receive the maximum tax credit when they file their 2011 taxes.
  • More than two in five (40.3 percent of) small businesses eligible for a tax credit are eligible to receive the maximum tax credit when they file their 2011 taxes.

The following are key report findings about U.S. workers. (The report itself also contains state specific data.)

  • Nearly 19.3 million Americans are employed by a small business that is eligible for a tax credit for 2011.
  • Of these workers, nearly 5.8 million are employed by a small business that is eligible for the maximum credit.
  • The total value of tax credits available to eligible small businesses for 2011 is more than $15.4 billion, an average of $800 per worker.
  • The total value of tax credits available to small businesses eligible for the maximum credit is more than $6.1 billion, an average of $1,066 per worker.

The report also contains state-specific data by race and ethnicity on the number of workers who can benefit from the tax credits. As the report makes clear, however, workers and employers can only begin to benefit when they become aware of the tax credit program.

Among small businesses with low-wage workers, the likelihood of offering coverage is even lower. As a result, lower-wage workers employed by small businesses are much more likely to be uninsured than other working Americans.

We know from our opinion polling that small businesses want to offer their employees coverage but many of them can’t afford it. The tax credits will make it easier for small businesses to offer coverage, which makes their businesses more competitive and boosts their ability to create jobs and drive economic growth.

“Small businesses seeking to provide health coverage for their employees have traditionally faced health insurance premiums that are significantly higher than those for large businesses,” said Ron Pollack, executive director of Families USA. These high premiums are due to higher administrative costs and premiums per employee in the small group insurance market, he said.

“The tax credit program, a provision of the Affordable Care Act, now makes it possible for small business to compete with large employers,” Pollack said. “This is great news for these small companies, who can now offer health benefits when competing for talent in the job market. Just as importantly, it’s great for workers and their families who will now have access to affordable health care.”

“We also know from our polling that the majority of small businesses don’t know these credits exist to help them,” Arensmeyer said. “The best way to serve small business owners is to educate them about this provision so they can participate in and benefit from it.”

Families USA and Small Business Majority contracted with The Lewin Group to develop the estimates used in the report. The full report, “Good Business Sense: The Small Business Health Care Tax Credit in the Affordable Care Act,” is available at http://www.smallbusinessmajority.org/small-business-research/downloads/050912_Small_Business_Healthcare_Tax_Credit.pdf.

Small Businesses Create 15 Jobs in April to Every One Created by Big Business

John Arensmeyer

John Arensmeyer

Original statement issued on May 4, 2012:

ADP released data Wednesday revealing our nation’s smallest businesses—those with 1-49 employees—continue to outperform large businesses in the job creation arena. Businesses with fewer than 50 employees created roughly half of all new jobs in April, while small businesses overall accounted for a sweeping 96.7 percent of all new jobs last month. Conversely, large businesses created a mere 3.3 percent of new jobs.

These figures reinforce the notion that small businesses—and particularly those with fewer than 50 employees—are indeed the country’s primary job creators and remain the backbone of the American economy. Of the 119,000 new jobs created last month, the smallest businesses created 58,000, while those with 50-499 employees were responsible for another 57,000, according to ADP (Automatic Data Processing, Inc.). Only 4,000 jobs were generated by businesses with more than 500 employees in April.

We encourage lawmakers to continue focusing on policies conducive to small business job creation, such as investments in renewable energy, which 71 percent of small business owners believe would help create jobs immediately according to research we released last week. Boosting small firms’ access to credit is another surefire way to keep the momentum going. Small businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that can ensure entrepreneurs have they tools they need to keep rebuilding the economy.